The Court of Appeal (CoA) found it was legitimate to include a non-objection clause in an option agreement.
Background:
This appeal was against the order of the High Court dismissing Suffolk Energy Action's claim for a judicial review of the Secretary of State's decision to make two Development Consent Orders (DCOs) under Section 114 of the Planning Act 2008, granting development consent for the construction of two offshore windfarms off the Suffolk coast and for their associated onshore development.
The DCO authorised the compulsory purchase of land needed for the onshore works, potentially from 55 different landowners. Suffolk Energy Action was incorporated by a local residents' group to protect the coast and countryside. They opposed the onshore works and brought a claim for judicial review against the DCOs on the basis that the interested parties, East Anglia One North Ltd. and East Anglia Two Ltd., had 'stifled' the ability of landowners facing possible compulsory purchase to present objections to and information about a scheme for which East Anglia was seeking development consent due to the non-objection clause in the option agreements. The application for judicial review was dismissed and they appealed.
Decision:
The CoA dismissed the appeal. It found that the Heads of Terms with the 55 landowners were not contractually binding and the landowners would have been advised of this by their legal advisers. Moreover, no option agreements had been completed, so none of the landowners were contractually bound by the non-objection clause.
The fact that 39 out of 55 landowners who had signed the Heads of Terms had objected to the DCO showed that landowners were not, in practice, 'stifled' or 'neutralised' when it came to objecting to the scheme. As such, the existence of the non-objection clauses did not interfere with the examination process.
The use of non-objection clauses in the Heads of Terms and Option Agreements was legitimate in the circumstances of this particular scheme. Such conclusion was backed by the findings of the CoA in Fulham Football Club Ltd v Cabra Estates plc (1993), where the Court held that there was no valid objection on grounds of public policy whereby a party to a commercial transaction involving the disposition of land undertook to support, and refrain from opposing, planning applications by the other party for the development of the land.
Implications:
It is common in large-scale infrastructure schemes for the promoter to reach an agreement with landowners to acquire their land (option agreement). Those agreements often contain a clause that requires the landowner to agree not to object to the proposal during the planning process (a non-objection clause). This decision makes clear that the current practice is lawful and that those clauses cannot be regarded as 'stifling' the ability of landowners to object.
It should be borne in mind that the Court did note that the clause was legitimate ‘in the circumstances of this particular scheme’ which leaves the door open for some potential changes. However, for now, those clauses are lawful and there is no need to change them in your existing contracts. This judgement also highlights how difficult it is for campaigners to overturn consent to schemes.